LONDON, (Reuters) – French oil major Total said on Wednesday it expects a decision soon to proceed with a new 400,000 barrels per day (bpd) refinery in Saudi Arabia.
The world’s top oil exporter Saudi Arabia is planning four new plants to add as much as 1.6 million bpd to current domestic refining capacity of around 2.1 million bpd. But equipment and labour shortages have forced project costs up worldwide in the energy sector and raised industry concerns about the new Saudi plants.
“The Jubail refinery project in Saudia Arabia in partnership with Saudi Aramco should be proposed for approval soon,” Total said in a statement.
The decision could come within two weeks, a Gulf industry source said.
The estimated cost for the new refinery and a similar plant state oil firm Saudi Aramco is planning with U.S. firm ConocoPhillips has risen above $10 billion from initial estimates of around $6 billion, industry sources have said.
Total expects the refinery to start up in 2012.
Both refineries will be complex and able to process the increasing quantities of heavy oil that Aramco expects to produce in the future. The giant new Manifa oilfield development project will pump around 900,000 barrels per day of heavy oil and is due on line in 2011.
Aramco signed the deals with Total and Conoco to build the new refineries in 2006. Total’s plant is to be built on the Gulf coast, while the Conoco refinery is earmarked for the west coast at Yanbu.